WA House APP - Committee Meeting
(February 19, 2021)

Here are some observations from the Friday February 19th Washington State House Appropriations Committee (WA House APP) meeting.

My top 4 takeaways:

• Committee staff provided a detailed rundown of the legislation and associated fiscal implications.
  • At the January 25th meeting of the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) members adopted two motions which formed the basis of HB 1443.
    • The first covered social equity applicant criteria.
    • A second recommended that the legislature modify the criteria for the technical assistance grant program to permit otherwise eligible current licensees to apply for funds allocated by the state but unable to be disbursed before the Washington State Liquor and Cannabis Board (WSLCB) received guidance on the equity applicant process from WA SECTF.
  • The Washington State House Commerce and Gaming Committee (WA House COG) heard the bill on February 5th and passed a substitute version through a party-line vote on February 12th. 
  • WA House COG Research Analyst Kyle Raymond provided background, stating that HB 1443 “concerns social equity within the cannabis industry.” He provided detailed information on the enacting legislation creating a WSLCB social equity program, assistance grants, and task force (audio - 8m, video).
    • Raymond went over the program’s statutory components, who qualified, and the expiration date of July 1st, 2028. He provided details on the technical assistance grant program to be run by the Washington State Department of Commerce “funded with a $1.1 million annual appropriation from the dedicated marijuana account (DMA),” as well as the task force’s membership, structure, and purpose. Raymond called attention to the fact that the task force included two appointees “that hold a producer or processor license or both.”
    • Next, Raymond reminded the committee that under statute the task force had been expected to make their “final recommendation” to WSLCB by December 2020. While the agency could undertake rulemaking based on WA SECTF guidance, he observed that recommendations to “increase the number of retail outlets that are above the statewide limit must be approved by the legislature.”
    • Raymond also established that staffing for the task force was being handled by the Washington State Governor’s Interagency Council on Health Disparities before responsibility could be transferred to the Washington State Office of Equity which was under development. The task force was set to disband on June 30th, 2022.
  • Turning to the substitute bill’s effects, Raymond described its impacts on the social equity program, grants, and task force:
    • The substitute would expand the grant program so that “eligible applicants include all existing cannabis license holders, this is rather than just retailers in current statute, and it also includes cannabis license applicants” provided they “meet social equity criteria.” Membership on the task force was expanded to include “two processor and two producer license holders” rather than two producer or processor license holders.
    • The substitute would require Commerce officials “to create a technical assistance pilot program” by October 2nd, 2021 “to provide cannabis retailer licenses who meet social equity applicant criteria” with a minimum of $150,000 through the pilot program. Recipients of the money through the proposed pilot program and an eventual technical assistance grant program had to show “project completion within 12 months of receiving” funding, or get an extension approved by Commerce staff.
    • The substitute would extend the WSLCB social equity program “by one year to July 1st of 2029” and applicant criteria exemptions around “conviction of a marijuana offense” would be “expanded to include all drug offenses.” WSLCB would be expected to make rules on “the period of time an individual must have lived in a disproportionately impacted area to be considered a social equity applicant.” The applicant would be required to more generally “meet criteria defined in rule by the LCB” which would “consult with the [Washington State] Commission on African American Affairs and other commissions, agencies, and advocates” before adopting rules.
    • The purview of required task force recommendations would be extended to include:
      • “providing recommendations to the LCB on the issuance of existing cannabis producer and processor licenses” in addition to retail licensing
      • the social equity impact of altering residential cannabis agriculture regulations;
      • the social equity impact of shifting primary regulation of cannabis production from the board to the Washington State Department of Agriculture (WSDA), including potential impacts to the employment rights of workers;
      • the social equity impact of removing nonviolent cannabis-related felonies and misdemeanors from obtaining a cannabis license;
      • whether to create workforce training opportunities for underserved communities to increase employment opportunities in the cannabis industry;
      • the social equity impact of reducing or ending the funding directed to the Washington State Patrol Drug Enforcement Task Force and redirecting an equivalent amount to a Cannabis Social Equity Program; and
      • the social equity impact of creating new cannabis license types.
    • Raymond noted the modified “due date” for the final recommendations to be reported to the governor, legislature, and agency was January 10th, 2022 and that task force would be due to expire in June 2023.
  • WA House APP Fiscal Analyst Jessica Van Horne reviewed a revised fiscal note on HB 1443, saying it was “fairly similar” to the original projections of the bill’s cost and potential revenue (audio - 2m, video).
    • Commerce staff estimated costs starting at $321,000 in fiscal years 2021-23, and $318,000 for subsequent bienniums. She said the money would come from the DMA. Commerce officials would be required to allocate a minimum of $150,000 “per year for this program,” Van Horne reported, to cover staffing “and the associated goods and services costs.”
    • WSLCB “assumes one time costs of $38,000” for the current biennium from the DMA to pay for “rulemaking around the new requirements for social equity applicants,” Van Horne said.
    • She explained that “staff support for the task force will continue to be provided by the health equity council which is supported by the [Washington] State Board of Health (SBOH)” which anticipated one time costs of $363,000 from the State’s general fund in fiscal year 2022. Washington State Department of Health (DOH) and equity council staff continued to assume that staffing for the task force would be handled by the Council “for their entire duration...though there is the option that the Office of Equity could staff it,” Van Horne added
    • The bill “removes the requirement to have the House and Senate to pay for the expenses of the task force, so all of those costs...would stay in Department of Health,” Van Horne said, commenting that the governor’s office and Washington State Office of the Attorney General (WA OAG) “indicate no fiscal impact.”

• Representative Tana Senn asked about the proposal’s emergency clause but couldn’t get a firm answer from available staff (audio - 3m, video).
  • Senn, a Democrat, wanted to know about the final section of the bill, which stated “This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.” In particular, she asked “what would not be possible if it was in 90 days” before the bill took effect.
  • Democratic Chair Timm Ormsby called Senn’s inquiry “a policy question that would be difficult for our analysts to, to opine on” but invited Raymond to share any insight. Raymond replied there was “not anything in the bill that would be prohibited from being enacted within 90 days.” Committee Counsel Kristen Fraser clarified that “the emergency clause allows the bill to take effect sooner than 90 days constitutionally...only if it is necessary for the immediate preservation of the public health and safety, or the support of state government and its existing public institutions.” Ormsby remarked that “we probably don’t have an iron clad answer for you at this point...but we’ll look into that.”

• Vice Chair Nicole Macri told the committee that no one had signed up to provide testimony, however several people signed in all supporting the legislation.
  • Vicki Christophersen, Washington CannaBusiness Association (WACA) Executive Director
  • Camille Gix
  • Samantha Grad, UFCW 21 Political and Legislative Organizer
  • John Kingsbury
  • Herb Krohn, SMART Transportation Division
  • Quinn Majeski, City of Seattle State Relations Director
  • Bryan McConaughy, Washington SunGrowers Industry Association (WSIA) Lobbyist
  • Briahna Murray, Contract Lobbyist for City of Tacoma and Gordon Thomas Honeywell Governmental Affairs Vice President
  • Paula Sardinas, CAAA Commissioner
  • Albert Sardinas, Washington Build Back Black Alliance (WBBBA)

• WA House APP added HB 1443 to their executive session agenda for Monday February 22nd which was also the house of origin fiscal committee cutoff date.
  • HB 1443 was scheduled for executive action later in evening after the adjournment of the committee meeting. According to the session cutoff calendar, Monday February 22nd was the “Last day to read in committee reports (pass bills out of committee and read them into the record on the floor) from House fiscal committees and Senate Ways & Means and Transportation committees in house of origin.”